First there was the Furby, then the Tamagotchi, soon there will be the iKat, a virtual pet that you can only see through your phone. The iKat even has a shadow.
Though it looks pretty simple, the technology behind the iKat opens up a lot of possibilities for augmented reality apps. The technology allows a phone to recognize spaces in 3D and add virtual objects into them in realtime, which could be used to show directions in perspective, play games based on your local environment, and everything in between.